WASHINGTON Employer groups are urging the Department of Labor to wait a year before implementing a proposed rule that would require more fee disclosure for participant-directed defined contribution plans, according to comments filed with the department.
The proposal would give participants in 401(k) and other defined contribution plans uniform and useful fee and expense information about their investment options. The new disclosures would take effect for plan years starting on or after Jan. 1, 2009, according to the DOL's plan.
The proposed rule, published in the Federal Register July 23, is intended to ensure that participants receive more information on fees paid by the plan to money managers.
In separate written comments, the Committee on Investment of Employee Benefit Assets, the ERISA Industry Committee and the Profit Sharing/401k Council of America each recommended that the DOL postpone the effective date until plan years beginning at least 12 months after the agency publishes its final regulation in the Federal Register.
Imposing a very short deadline will increase (compliance) costs dramatically, CIEBA, which represents corporate plan sponsors, said in its comments. It makes little sense to ask sponsors or participants to bear significantly higher administrative costs simply to meet an arbitrary deadline.
ERIC, which represents employers, urged the DOL to make clear that plan fiduciaries would not be held liable for erroneous information (in disclosures) furnished by others unless the fiduciary is aware of the error and fails to take reasonable measures to correct the error.
PSCA, which represents 401(k) plan sponsors and participants, recommended that fiduciaries not be held liable for relying on disclosure information provided to them by plan service providers.
The deadline for comments on the proposed rule was Sept. 8. DOL officials want to publish a final rule before Dec. 31.